By Wallace Witkowski, MarketWatch

Health-care, media, energy earnings start winding season down

Earnings beats this season have been cheapened, with lower-than-usual expectations making for little fanfare with investors when companies top the Wall Street consensus.

Stocks finished with a weekly loss Friday (http://www.marketwatch.com/story/wall-street-to-eke-out-gains-in-the-cruellest-month-for-tech-amazon-soars-2016-04-29) as the Dow Jones Industrial Average and the S&P 500 index failed to produce a third straight week of gains, with both the Dow and the S&P 500 declining 1.3%. The Nasdaq Composite Index turned in its second week of losses, shedding 2.7%. The Dow and the S&P both held on to monthly gains.

The standard earnings-expectation game is that companies lower estimates over the quarter, analysts comply, and then companies top the lowered bar. But over the first quarter, the bar dropped lower than usual. While analysts expected first-quarter S&P 500 earnings to grow by 0.5% by the end of December, that eroded to an expected 8.5% decline by the end of March. Currently, the index is tracking toward a decline of 7.6%.

It follows that investors are more mindful than ever of the low-expectations game this earnings season as they tend not to reward beats and punish misses more than average. So far, companies that have reported higher-than-expected earnings have only seen a 0.4% price increase in shares from the two days before the release to two days after the release, according to John Butters, senior earnings analyst at FactSet. That's compared with a five year average of a 1.2% price gain.

Companies missing estimates have seen shares decline an average 2.9% over the similar period, compared with the five-year average of 2.2%, according to Butters. Add to that for good measure that of the S&P 500 companies that have reported earnings so far, 74% of them have topped Wall Street estimates, well above the 67% five-year average.

Read:Low expectations are acting as a crutch this earnings season--but not for tech (http://www.marketwatch.com/story/low-expectations-are-acting-as-a-crutch-this-earnings-season----but-not-for-tech-2016-04-29)

Of the only two Dow components reporting in the week ahead, both are health care companies: Pfizer Inc.(PFE) on Tuesday, and Merck & Co.(MRK) on Thursday. More than a fifth of the companies on the S&P 500 report, representing about 15% of the index's $19.79 trillion market cap.

Other than big health-care names, media companies figure heavily during the week with reports from Time Warner Inc.(TWX), 21st Century Fox Inc.(FOX)(FOX), and CBS Corp.(CBSA). Insurers like MetLife Inc.(MET), Chubb Ltd.(CB), and Allstate Corp.(ALL) will also report.

Plus with energy majors like ExxonMobil and Chevron out of the way, relatively smaller energy players like Halliburton Co.(HAL), Valero Energy Corp.(VLO), Occidental Petroleum Corp.(OXY), and Transocean Ltd.(RIG) will also report results.

Report date    Company/ticker (FactSet EPS / revenue estimates) 
Mon., May 2    Sysco Corp. US:SYY  (42 cents / $11.87 billion) Edison International US:EIX  (88 cents / $2.81 billion) 
Tues., May 3   Pfizer (55 cents / $12.06 billion) CVS Health Corp. US:CVS  ($1.16 / $43.01 billion) Halliburton (4 cents / $4.2 billion) American International Group Inc. US:AIG  ($1 / $13.61 billion) CBS (94 cents / $3.83 billion) Molson Coors Brewing Co. US:TAP  (43 cents / $627.9 million) Valero Energy (69 cents / $15.3 billion) Anadarko Petroleum Corp. US:APC  (per-share loss $1.17 / $1.72 billion) 
Weds., May 4   Kraft Heinz Co. US:KHC  (63 cents / $6.46 billion) Time Warner ($1.29 / $7.29 billion) 21st Century Fox (47 cents / $7.19 billion) Priceline Group Inc. US:PCLN  ($9.64 / $2.12 billion) Whole Foods Market Inc. US:WFM  (41 cents / $3.74 billion) McKesson Corp. US:MCK  ($3.14 / $46.81 billion) 
Thurs., May 5  Merck (85 cents / $9.46 billion) MetLife ($1.38 / $17.17 billion) Chubb ($2.15 / $6.5 billion) Allstate (70 cents / $7.61 billion) News Corp. US:NWSA US:NWS (4 cents / $1.93 billion) Kellogg Co. US:K  (94 cents / $3.47 billion) Activision Blizzard Inc. US:ATVI  (12 cents / $812.4 million) Discovery Communications Inc. US:DISCA  US:DISCB  (42 cents / $1.56 billion) Scripps Network Interactive Inc. US:SNI  ($1.03 / $794 million) Motorola Solutions Inc. US:MSI  (41 cents / $1.17 billion) TripAdvisor Inc. US:TRIP  (47 cents / $371.8 million) Occidental Petroleum (per-share loss 40 cents / $2.19 billion) Apache Corp. US:APA  (per-share loss 90 cents / $1.07 billion) Transocean (31 cents / $1.14 billion) 
Fri., May 6    EOG Resources Inc. US:EOG  (per-share loss 83 cents / $1.61 billion) Cigna Corp. US:CI  ($2.15 / $9.98 billion) Cognizant Technology Solutions Co. US:CTSH  (79 cents / $3.22 billion) Weyerhauser Co. US:WY  (20 cents / $1.95 billion) 

Plus, with it being the beginning of a new month, April's job numbers come out on Friday. Economists surveyed by MarketWatch expect the addition of 200,000 jobs and an unemployment rate of 4.9%.

Other economic data to look for are the Institute for Supply Management's manufacturing data for April on Monday, April motor vehicle sales on Tuesday, and ISM services data on Wednesday.

 

(END) Dow Jones Newswires

April 30, 2016 21:11 ET (01:11 GMT)

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